The Beginner’s Guide to CRD IV Reporting – And why Banks Need to Pay Attention

Recently we talked to you about moving into an interesting new market, financial compliance. In this blog, let’s explore this topic in a bit more depth.

A lot of financial regulation centres on Basel III, the regulations that govern global, financial organisations. In Europe, these have been collected together into CRD (Capital Requirements Directive) IV.  The point about CRD IV is that it brings together a whole set of governance around banking organisations post-2008 in order to prevent future liquidity crises.

The bigger picture is that European harmonisation of regulatory reporting requirements has meant firms are required to report the data to their competent authority. In the UK, that’s the FCA (Financial Conduct Authority), but it differs from country to country. In practical terms, this means any firms affected by CRD IV will need to obtain a suitable method of converting data into XBRL (eXtensible Business Reporting Language), which is based on XML (Extensible Markup Language) and so is able to make use of all the useful tools that come with that, in order to create an XBRL report that needs to be validated against the taxonomy which has been issued by the European Banking Authority (EBA).

The EBA is in effect insisting that it can only receive that information in XBRL, as are other sub-organisations. There is a lot of interaction going on between these different organisations across Europe, which also affects you if you operate in multiple geographies.

XBRL has been around for a while and suppliers have created functionality to be able to validate data being entered through rules implemented around XBRL. One of them is CoreFiling, who we work with and who has built up real expertise in this area.

CoreFiling’s software converts the user’s data to XBRL and then validates it against a set of rules which have been tailored to what the regulatory authorities want (i.e. to fit into some pre-defined taxonomies, which contain all the specific rules for validation of the data, and comprises part of the overall CRD IV filing report).

The bottom line is that reports have had to be created. CRD IV came into play at the beginning of this year- so January 1st 2014; and all these rules now apply going forward. The first one of these specific format reports, for Liquidity Coverage Ratio, had to be in by the end of April this year. So there was a lot of pressure on financial organisations to get this in place. And soon banks will have to be filing others. They will also have to be able to report in different currencies, e.g. euros, pounds or dollars.

This means a lot of information has to be captured and properly organised. It’s very likely that a lot of this information will be held on a number of different systems, be it SAP, Oracle or some other financial systems.

Plainly, there is no easy way to get XBRL out of these systems. You can maybe add data into an Excel spreadsheet either manually or through some smart macros. But that doesn’t give you XBRL, unless you are prepared to do some very hard work on it.

CoreFiling is able to satisfy the requirements for these online report submissions; its clever software does this via applications that produce, transport and validate XBRL using a configured regulatory taxonomy. Specifically, it takes both CSV and Excel data and not only converts it into XBRL, but also validates it. So, if you have the data, you can put it in one end of the sausage machine and out comes what you need to meet your CRD IV requirement.

Next time, let’s talk more about how EMC and SynApps technology add value to this process.